Consumer relationship with beef shapes industry

There’s a stark contrast between the Argentinian shopper’s attitude to beef and that of the European consumer – and it’s something which has impacted the whole supply chain.

70% of beef is bought from a butcher in Argentina, with little to no demand for pre-packed meat. The consumer has inherent trust in the system and isn’t particularly concerned about where their meat comes from – as long as it’s consistent, high quality and tender. They also have confidence in their own ability to choose meat from the butcher’s counter – showing preference for the national favourite; ribs and cuts to make schnitzel.

This links back to the current requirements for finished beef in the country. All cattle are sold live weight, with the farmer having to produce an animal of over 300kg. As the consumer believes smaller animals are more tender (see previous post) the average size of a heifer (usually Aberdeen Angus or Hereford) is around 340kg live weight at finish and around 400kg for a steer.

IMG_0784

To date, the Argentine farmer receives payment based on the weight of that live animal and whether it’s classed as ‘good’ or ‘bad’. How the animal has killed out has traditionally been of little concern as animals aren’t graded in any more detail.

Very little beef is sold pre-packed (left). This is the only packed fresh beef available in La Gallega supermarket in Rosario.

With the current system, consumers are completely happy with the beef that’s available on the market and there’s no demand for things to change. However, Argentina’s drive to make more of its export markets means that changes are afoot.

Animals produced for the EU export market are already larger than those for the internal market, with steers averaging over 450kg live weight. However, the Argentinian farming industry has recognised that more needs to be done to produce quality beef that meets the EU consumer’s more specific tastes surrounding quality and traceability.

As a result, Sebastian Bendayon from The Chamber of Abattoirs in the Province of Santa Fe, told me that the industry is overhauling the “Argentine Typification” for grading meat.

“This system is currently being revised to differentiate between the colour of the meat, the colour of fat, whilst also taking into account marbling,” he explains. “The farmer today is being more consciousness about meat quality, but up until recently, they only sold meat. There was no differentiation.”

IMG_0748Sebastian Bendayon says beef classification guidelines are changing to meet export market requirements.

The new meat classification guidelines are in the draft stages, however it looks likely that they will look towards the American system of beef classification. This considers age, type of animal by gender and weight and also marbling, meat colour, fat colour and other meat quality characteristics.

Sebastian says the changes are purely being implemented because of the demands of the export market. He explains: “It’s basically to do with the external market and to have a classification that’s valid for the foreign market and foreign consumer.”

Farmers will continue to sell animals live weight, but the idea is that certain producers will gain a reputation for producing animals with the desired meat quality characteristics and thus achieve a premium from buyers.

“So farmers will be more conscious about raising and fattening of animals and take into account feeding and genetics as well,” Sebastian adds. “Previously Argentine farmers had the luxury of just having generic beef and the market would give them a good price. Now we’re moving into a stage where the market rewards for efficient, conscientious farmers.”

The effects are already being seen on the ground. Pedigree producers are already selecting for rib-eye area and marbling. A vet also told me that he was ultra-sounding commercial beef animals for these parameters on some of his client’s farms (unfortunately I wasn’t able to find out more about this whilst I was in the country).

As the new classification standards will be national, all producers – regardless of whether they are producing for internal or external consumption – will have to comply.
The challenge may come in convincing the Argentinian shopper that they want different meat and will pay extra for rib-eye and marbling. With beef so engrained in Argentine culture and the consumer so sure about what they want, it could be a struggle.

 

 

Big does’t mean beautiful in Argentina – but things are changing

IMG_0118

In the UK, the market doesn’t want finished beef animals that are too large, but in Argentina, it’s almost the complete opposite.

The Argentine consumer typically has an appetite for smaller heifers of under 350kg liveweight. The reason is their belief these animals are more tender. However, with the country developing its export market – which demands larger animals, generally over 450kg- the industry is trying to close the gap between the two market streams and encourage consumers to select meat from bigger carcasses in order to boost production efficiencies.

Changing Argentine culture is a difficult one. You only need to look along the cattle pens at Linears cattle market (below) on the edge of Buenos Aires to see the typical small framed cattle that form the basis of the country’s diet.

IMG_0092

With an annual consumption of 60kg of fresh beef a head (the highest consumption per capita in the world – although I believe there’s some debate on that with Uraguay), the Argentine carnivore likes their meat and they know what they want.

Victor Sisinni (below), auctioneer for Da-ness srl – one of 55 auction houses operating in Linears market, adds: “Argentine consumers are spoilt to eat smaller, younger animals. But there is a concerted effort among farmers and industry institutions to get consumers to eat bigger animals and maybe not produce as many cattle but more kilos of beef.”

IMG_0076

The market handles around 10,000 head a day – although the day I went was after the Easter break so numbers were down to around 4,000. The market is purely for finished beef animals, with stock going direct to slaughter after being purchased. 85% would be for domestic consumption, with the rest for non-EU exports. Argentine beef isn’t hung, so beef from today’s market at Linears, could be on the plates of Buenos Aires consumers tomorrow.

Victor says steers generally average 400kg live weight and heifers 330-340kg. Cattle are split into different classes at sale: 300-350kg – male or female ‘calves’; 350-430kg – small steers or small heifers; and 430kg+ steers and bulls. These are then classified as “good” or “bad”.

On the day (3rd April – see video below), Victor sold 390 cattle, with heifers averaging 37 peso/kg (£1.30) live weight and steers, 35-36 pesos/kg LW (£1.23-£1.27). 6-7 year old Angus cull cows averaged 23 peso/kg (81p/kg).

I met with Adrian Eduardo Bifaretti and Eugenia Ana Brusca from the“Instituto de Promotion de la Carne Vacuna” (The institute for the promotion of Argentine beef consumption). They told me that 70% of fresh beef here is sold through butchers, with very little available pre-packaged.

The Argentinian shopper goes to their local butcher and usually specifically asks for “ternra”, which means a young animal of under 350kg (this could be a heifer or steer).

In order to change shopping habits, the instituto is actively promoting “special steers” (light steers of 380kg live weight) to the Argentinian shopper. This is financed through the industry as part of a levy paid at slaughter. Farmers pay 11 pesos (39p) per head, with abattoirs paying a further 6 peso per head (21p), which goes to the institute.

The adverts for the campaign have predominantly been placed on social media, with various slogans such as; “At your home or outside, always ask for the special steer”. TV chefs have also been encouraged to promote this type of meat, with radio also being used to communicate the message. “La Rural” Show – which sees 1 million visitors come through its gates in Buenos Aires in July – is also a key route of communication to the public.

This year, the aim is to try and develop the campaign to promote the fact that a “heavy’ steer is also as tasty as a heifer.

No doubt it will be a challenge to change engrained shopping habits. However, the fact the Argentine consumer is so open to eating different cuts of beef already (whether its assado (ribs), knuckle or schnitzel for example), must work in the industry’s favour – once the taste test has been passed.

 

 

 

 

 

 

Argentinian Beef – why does it matter to the UK?

pexels-photo-735973.jpeg

So, of all the countries in the world, why I have I chosen to visit Argentina for my Guild of Agricultural Journalists Perkins Innovation Scholarship?

You may think I’ve obviously gone in order to stock up on Malbec and eat steak (and you’d be right to some degree), but my trip is also a timely one in terms of the relevance of Argentinian beef farming to the UK.

The EU has been negotiating with the Mercosur trade block (Argentina, Brazil, Paraguay and Uruguay) for many years, in an attempt to forge a deal that would give the EU more open access to the block’s car and dairy markets. In return, the Mercosur block would get greater access to the EU’s beef markets.

Current discussions appear to centre around increasing the amount of reduced tariff beef that can be imported into the EU from the Mercosur countries from 70,000t to 99,000t.

Negotiations have been slow. However, things appeared to gain speed in February this year when officials met in Brussels.

Discussions have understandably worried European farmers, who have raised concerns over market competition from cheap South American beef and food safety standards.

UK farmers should understandably be a bit twitchy considering the huge uncertainty around Brexit. For example, if the UK has to pay tariffs to export beef after leaving Europe, they will be in direct competition with cheap South American imports. The UK government will also likely forge its own agreement with Mercosur, which could see more South American beef on the domestic market.

I spoke to AHDB’s head of exports, Peter Hardwick before I left the UK to get a better understanding of the overall market picture. He explained that the type or cuts of beef included in any reduced tariff deal would likely be more significant than the volume itself. High quality cuts, such as strip-loins, fore-ribs and rump and loin sets would compete more directly with European/British beef farmers.

Argentina is obviously just one of the countries in the Mercosur block, but a significant one. There are two main EU export quotas currently available to the Mercosur countries – the Hilton Beef Quota being the main, high quality beef quota. Argentina currently has around half of the total quota of 62,250t available to the four countries. Beef through the Hilton Quota is imported at 20% duty, which means it is competitive against EU beef.

Peter also told me about an extra 48,200t of quota at zero tariff, which is available for the Mercosur countries to pitch for – Argentina included.

For some time, the challenging political environment in Argentina has meant the country has “significantly underperformed” in terms of hitting its quota allowance.

For many years, the country has struggled with huge fluctuations in inflation. Between 2003-2015 the country was governed by the left wing, populist part of Nestor Kirchner, and then wife Cristina Fernandez de Kirchner. They introduced a number of policies that impacted on Argentina’s position on the global stage.

Consultant, Monica Ganley from Quarterra– who originates from the US, but has lived in Argentina for five years – explained the situation to me:

“Argentina, when it comes to agriculture, could be a bread basket for the world. It should be an exporter. There’s tonnes of resources here. There’s more food here than people. It should be a world supplier. But one of the things the Kirchners did in their “protectionist agenda” is they put in lots of rules that limited exports in an effort to keep prices low,” she says.

Beef in particularly was massively affected. In the short term, the strategy did what it was meant to – creating more supply for the domestic market and keeping prices low. But as Monica says, “ultimately it ends up decimating your market”.

Farmers stopped investing in beef and many went out of beef altogether in favour of soya production.

However, a new “centre-right” government elected in 2015, appears to be turning things around. Relatively quickly, current president Mauricio Macri put an end to the export tariffs for beef, wheat and maize. The export tariff for soya was also reduced from 35% to 18%.

That means farmers have started to invest and the industry is embracing technology to boost production, and no doubt efficiencies. In 2017, the country exported 15% more beef and live animals to the EU compared to the year before.

All of these factors combine to mean that Argentinian beef is increasingly significant to UK and EU farmers and is why I’ve chosen to focus my attention on the country.

Over the next nine days, I’ll be speaking to farmers and ministry officials to find out how the industry is developing and how they hope to exploit the EU market. Stay tuned.